Externalities Imposed on Residential Properties in Highly Urbanized Areas
AbstractIn highly industrialized areas open spaces such as farmland and nature are under pressure since urban areas are expanding at their expense. Because of the high opportunity costs of development in urban areas, a high price has to be paid for the maintenance or creation of open space. The question is if this high price can be justified by the value of the open space. We estimate the value residents attach to surrounding open space in a hedonic pricing model. More specifically, we investigate in a highly urbanized area in the Netherlands how the externalities of farmland, nature, and other uses, such as industrial areas and the sea affect residential property prices. Moreover, spatial lag and error dependence are corrected for in the hedonic pricing model used to estimate the value of open space and other externalities. According to our results premiums are paid by residents who buy properties close to urban parks and the North Sea and for properties with views on open space.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43950.
Date of creation: 2008
Date of revision:
Hedonic pricing; Spatial econometrics; Externalities; Land Economics/Use;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-GEO-2008-11-25 (Economic Geography)
- NEP-URE-2008-11-25 (Urban & Real Estate Economics)
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